Identifying risks and assumptions help determine whether the suggested Goals and Activities are feasible and doable in the time frame and with the available human and financial resources.
Risk is described in this context as an unknown threat that, if realized, could have a detrimental impact on the achievement of the Goal or Activity. On the other hand, an assumption is necessary for the Goal or Activity to be completed successfully.
To avoid duplication and redundancy, you should define risks and assumptions should explain risks and assumptions at two levels: general and specific.
General risks and assumptions can be related to the roadmap’s overall implementation or apply to all Roadmap’s Goals. Single risks and beliefs will be associated with a specific activity, such as a particular risk that could obstruct the successful implementation of a specific Activity or a crucial assumption for the performance of a specific Activity. For instance, a particular belief for the Activity “establishing an Authorized Economic Operators Scheme” is that incentives granted to AEOs are enough to motivate private traders to invest the time and resources to get the certification.
“Two roads parted in a forest, and I took the less used one, which has made all the difference.” This line is instantly recognizable as the conclusion to Robert Frost’s “The Road Not Taken.” Most readers assume that Frost’s poem is hopeful, describing the value of solid individualism that has long served as an American hallmark. On the other hand, a measured reading has a sad, regretful tone. Literary critics claim that the poem’s central message is how we rationalize regrettable judgments after they’ve been made.
Like how Frost provides a thoughtful and regretful view of the path he did not take, executives view risk primarily through the lens of responsibility. This misunderstood poem helps highlight how innovation-seeking executives need to reframe the word “risk.”
When the word “risk” comes out of an executive’s mouth, it’s usually accompanied by one of four mistakes:
- Assume action is the greatest risk: In many cases, the riskiest action is, in fact, no action. Because of the rapid rate of change in today’s environment, being static means falling behind existing and emerging competitors. Many businesses are blind to this reality because of the way they make investment decisions.
Promising entrepreneurs recognize the inherent risk of starting a new firm. After all, it is well known that most new businesses fail and that most of those that succeed modestly enough that the entrepreneur receives a small financial return for his efforts. What promising entrepreneurs excel at is not taking risks but handling them. They do not do it.
- Celebrate failure to encourage risk-taking: There can be no innovation without risk since invention has uncertain outcomes, some of which may be bad. Therefore, encouraging risk-taking can help increase innovation. However, this does not imply a general endorsement of failure. Failure is often a horrible thing. It is never acceptable to praise a lack of effort or preparation. Instead, leaders should accept that the road to innovation is never straight and that hesitation, false starts, and failure are all part of the process.
- Thinking that rewarding success will increase risk-taking: Innovation-hungry corporate executives often gnash their teeth about compensation challenges, lamenting that their system won’t deliver the vast profits that await entrepreneurs in unicorns (start-up companies valued at more than a billion dollars). TRUE. However, this is not what holds innovation back in most companies. It’s not the lack of rewards; it is the presence of punishments. The uncertainty that accompanies innovation means that sometimes people will do everything right and have a business failure anyway. If this outcome carries severe punishment, don’t expect anyone to take risks.
To innovate, we first need to reframe how we talk about risks. So, the next time you prepare to give a speech about dangers, pause to make sure you’re not making any of these mistakes.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.